UK looks to cryptocurrencies and FinTech to boost economy
The UK Government is to examine the potential of digital currencies as positive force in the wider economy and as a means of encouraging innovation in financial services.
The Chancellor of the Exchequer, George Osborne, will announce today “measures to support the growth of the country’s emerging FinTech sector and encourage innovation in finance, including supporting alternative finance providers and exploring the potential of virtual currencies and digital money”.
One of the steps the government will take is to start a programme of work looking into how virtual and digital currencies could or should be regulated in Britain.
The government believes the growth of alternative finance providers, a major part of the FinTech sector, will benefit the economy by allowing small and medium-sized businesses to access alternative sources of finance if they are turned down for finance by their bank.
To boost this, new rules are being introduced that will require banks that reject SMEs for finance to ask these firms whether they want their information to be shared with “designated online platforms that can match firms with challenger banks and alternative lenders, including FinTech lenders such as crowd-funders, peer-to-peer lenders and invoice financiers”.
According to HM Treasury, the UK alternative finance market expanded by 91% in 2013, to almost £1 billion, and is expected to be worth £1.6 billion in 2014.
Osborne said: “It’s only by harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers here and around the globe, and create the jobs and growth we all want to see in the future.”
The government will publish a strategy document later this year setting out in detail how it intends to make the UK the global centre of financial innovation. Among the measures announced today are:
- A consultation on a new strategy for the UK’s digital communications infrastructure, seeking views on the likely demand for digital communications and technology from business, consumers and public bodies, and what infrastructure will be needed to meet this demand.
- A review of how the technology that serves the financial sector will evolve in the future, to be led by the Government Office for Science. Industry and academic experts will look at the “technologies, enablers and barriers that will shape the future of the FinTech sector up to 2025, and the policy implications for the government”.
- A £100 million extension of the British Business Bank’s Investment Programme, which addresses gaps in the finance market for smaller businesses and promotes a greater choice in their supply of lending, including in the FinTech sector. The British Business Bank has already committed over £100 million to FinTech firms through the complete range of its programmes.
- A proposal for a range of new awards and prizes to promote the development of innovative finance solutions that help small businesses access finance, co-sponsored by the British Business Bank and Innovate Finance.
- A new push by UK Trade & Investment in overseas markets to promote the UK as “the best place in the world” to set up and develop a FinTech firm, and attract inward investment to the sector. This will include a programme of trade missions to key markets.